US: Federal Reserve Chair Janet Yellen Speech

Highlights
Federal Reserve Chair Janet Yellen delivers testimony on the Economic Outlook before the Joint Economic Committee of Congress at the U.S. Congress in Washington D.C.

Markets are showing little reaction to Janet Yellen's appearance before the Senate Joint Economic Committee. In questions and answers, Yellen said recent economic data have been "consistent" with expectations for a near-term rate hike. This underscores her comment in her prepared remarks that a rate hike could, as stated in the FOMC's decision earlier this month, become appropriate "relatively soon" if incoming data prove strong. In response to Donald Trump's victory on November 8, Yellen said she intends to serve out her term as chair (which expires in 2018) and that she will need greater clarity on new fiscal stimulus before she can make an assessment.

Though she did say a near-term rate hike is in the cards, her prepared testimony was mostly on the dovish side. She described current monetary policy as only "moderately accommodative" and said there's further scope for improvement in the labor market and that the economy, whose pace she described as "moderate," still has "room to run." She said she doesn't see inflation spiking, saying it will hit the Fed's 2 percent objective "over the next couple of years." Despite the dovish hints, expectations remain firm that the FOMC will hike interest rates at its upcoming December 13 and 14 policy meeting.

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